AT the prevailing international crude price of around $25 per barrel, ONGC will earn a profit of around Rs 5,000 crore per annum over what it earned in the APM era on account of sale of crude.

During fiscal 2001-02, the company earned a profit of around Rs 1,000 crore on sale of crude when the average price of procurement of international crude was around $22-23 per barrel. For every rise in $1 per barrel in the international price of crude above the $20-mark, ONGC's profits will rise at roughly Rs 1,000 crore per annum.

This, however, does not account for the forthcoming rise in royalty rates. Currently, the royalty rate fixed at an ad hoc rate of Rs 850 per tonne. With states pushing for a 40 per cent ad valorem royalty rate, which is due for revision, the gains are bound to suffer. For purpose of computation, the royalty has been considered at 30 per cent. The cess payable to the Centre has been assumed at the prevailing rate of Rs 1,800 per tonne.

In the pre-APM scenario, profits from sale of oil and gas amounted to around Rs 1,000 crore each of the total Rs 5,228 crore profit that ONGC registered during fiscal 2001-02. Another Rs 1,500 crore accrued from the joint ventures  Panna Mukta, etc, which are not bound by any price ceiling. The rest was garnered from the value-added products that ONGC sold.